Background

In addressing the energy problems confronting California in 2000 and 2001, the Legislature enacted a number of bills to assure that customers of energy utilities paid for the costs of ameliorating those problems. One of the measures was a process by which customers who attempt to leave the utility system must, under some circumstances, still pay for certain programs. Those customers are called "departing load customers" and the charges they remain liable for include public purpose programs (PPP), nuclear decommissioning (ND) costs, and competition transition charges (CTC). (For a more detailed analysis see D.03-04-030, our OIR regarding direct access.)

The statutes requiring departing load customers to pay for the emergency costs provide exceptions for departing load customers to avoid those costs. In this complaint case the issue is whether or not complainant is exempt from departing load charges.

Pursuant to Pub. Util. Code § 372, SDG&E filed Tariff Rule 23, defining departing load as:

[T]hat portion of a Utility electric customer's load, subject to changes occurring in the normal course of a business as verified by metered data, for which the customer, on or after December 20, 1995: (1) discontinues or reduces its purchases of electric supply and delivery services from the Utility; (2) purchases or consumers electricity supplied and delivered by sources other than the Utility to replace such Utility purchases; and (3) remains physically located at the same location or within the Utility's service area as it existed on December 20, 1995. ...

A departing load customer must pay certain surcharges unless exempt. The departing load charges consist of PPP, ND costs, and CTC. SDG&E's Rule 23 sets forth specific circumstances under which "departing load" is not liable for CTC. "The billed CTC calculation shall not include consumption served by: (1) nonmobile on-site or over-the-fence self-generation capacity or cogeneration capacity that was operational on or before December 20, 1995[.]" (Rule 23, Cal P.U.C. Sheet No. 10619-E, No. 2(b).) Furthermore, "[a]fter June 30, 2000, consumption served by an on-site or over-the-fence nonmobile self-generation or cogeneration facility is not subject to the billed CTC calculation, per Section 372(a)(4) of the PU Code." (Rule 23, Cal. P.U.C. Sheet No. 10620-E, No. 2(d).) For customers exempt by Rule 23, Schedule E-Depart exempts departing load customers from ND and PPP charges (Cal. PUC. Sheet No. 18385-E, Special Condition 3.)

The Public Utilities Code provides the basic definition for "cogeneration":

218.5. "Cogeneration" means the sequential use of energy for the production of electrical and useful thermal energy. The sequence can be thermal use followed by power production or the reverse, subject to the following standards:

(a) At least 5% of the facility's total annual energy output shall be in the form of useful thermal energy.

(b) Where useful thermal energy follows power production, the useful annual power output plus one-half the useful annual thermal energy output equals not less than 42.5% of any natural gas and oil energy input.

The charges in dispute are:

Public Purpose Programs (PPP) $ 72,876.84

Nuclear Decommissioning Costs (ND) 10,493.01

Competition Transition Charges (CTC) 18,781.63

$ 102,151.48

Standby Charges 16,235.00

$ 118,386.48

Basic Service Charges 61.21

$ 118,447.69

Miscellaneous Charges 26.69

$ 118,474.38

The major issues in this case are 1) whether Farm ACW was a cogenerator during all relevant times, and 2) whether Farm ACW is liable to SDG&E after SDG&E disconnected its system from Farm ACW.